SolarCity and Tesla: The Golden Children of 2014?

If you had gobbled up shares of Tesla or SolarCity about six months ago, you would’ve raised a few eyebrows. With both companies being heavily dependent on government subsidies, they were, at the time, losing money at an alarming rate. To top it off, these were among the most shorted stocks on Wall Street, meaning many investors were betting on them to fail. For these investors, hindsight is 20/20.

These stocks surprised everyone by rocketing upward over the past year–SolarCity by 314% and Tesla by 336%. SolarCity has managed to avert the fate of so many other solar companies by using low-cost panels to its advantage through its operating lease model. Through this model, SolarCity installs these panels at no up-front cost to the homeowner; instead, the homeowner agrees to pay a small monthly sum to SolarCity for the solar energy generated, providing a constant revenue stream for the company.

For Tesla, its demand is outnumbering supply. With the cars being so luxurious, powerful and fun to drive — not to mention the ability to go 200+ miles per charge — these cars are becoming attractive, albeit expensive, options for drivers seeking to combine luxury with energy efficiency. By 2016, the company expects to be producing certain models at starting prices around $35,000–much more palatable for the average driver, since the average starting price on a Model S is in the ballpark of $70,000.

To read the full story, check out Will Deener’s article from Dallas News here.

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7 Comments

@ Norm Rhett,
Cliff has no plan because he is a shill for dirty energy. He pollutes this site with his verbal diarrhea on a daily basis. He ignores facts and continually brings up a plethora of minutae that have nothing to do with thermodynamics, economics or any other reality in this universe.

He is quite predictable and sometimes he can even be entertaining. However, most of the time he is just boring.

It never ceases to amaze me just how well organized the extreme corporate right has become when it comes to disparaging renewable energy technologies. The fossil fuel industry is informed enough to know true competition when they see it and have every reason to fear renewable & sustainable power.
But this fear-mongering over NF³ emissions is laughable when compared to the destruction resulting from traditional fossil fuel extraction contamination across almost the entire planet.
As for taxpayer dollars going to Tesla et.al., that's chump change when compared to the dollar value of environmental loopholes offered to the fossil fuel cartel.
http://www.earthworksaction.org/library/detail/loopholes_for_polluters#.Utflx7QmyRY
Readers of this periodical are well informed enough to see through the bias of C Claven and his manufactured rhetoric and will shrug it off.

Neither Tesla nor SolarCity are viable business enterprises. They exist only because of federal and state policies that feed them with wealth sucked from taxpayers, utility rate payers, and other businesses that are genuinely viable and produce real profit that can be reappropriated by the state. Both produce products that are consumer lifestyle choices, not good investment decisions. See below for some analysis of each.

BTW, if you want to save the environment and the climate the answer is not solar panels, whose manufacture releases nitrogen triflouride (NF3) which is 17,200 times more powerful a greenhouse gas than CO2, nor is it electric cars fueled with electricity from coal and natural gas electric plants. The best option for saving the planet would be to buy as your next car a cost-effective, cross-country friendly, family-hauling, gasoline-engined mini-van. Even better, buy a super high-efficiency diesel like a VW Polo that gets 81 MPG. Oh, I forgot, the EPA won't let 81 mpg cars be sold in the US because they emit a bit too many particulates per mile for their latest regulations even though all other emissions are much lower than alternatives. It's not industry that is squashing high-MPG cars, it is the government.

A Tesla S with the 85 kWh battery pack is a $95K-$120K car (depending on options) that requires at least a home charging system if not multiple systems at distances not to exceed its 230 mile maximum practical range (as reported by actual owners). The average American's home utility service itself will also need an upgrade to handle the higher power demand of the 220V charger. If the neighbors all decided to buy electric cars, the distribution grid itself would also need to be upgraded because everybody will be driving during the day and simultaneously charging their cars on 220V during the night, pulling more peak current. If the Tesla is driven like a regular car, it will require a new $18,000 battery pack every 5-8 years. When one does the math, it is not even close to a good business case over buying a conventional gasoline or diesel car.

It is also not justifiable for GHG emissions. When the up-front emissions associated with the mining of the rare-earth elements and lithium and the manufacturing of all the batteries is taken into account and amortized over the life of the car, the emissions of a Tesla S per mile are higher than a Jeep Grand Cherokee (http://www.uniteconomics.com/files/Tesla_Motors_Is_the_Model_S_Green.pdf). It gets worse if including the alumimum body of the car which consumes five times the energy per pound as steel in its mining, milling, and manufacture.

The Mustang's gasoline engine and liquid fuel and mechanical transmission and conventional differential and axles deliver twice the horsepower and twice the range per pound as the Tesla S for one third the price.

So the media darling, non-green, highly subsidized electric roadster ($7,500-$15,000 per car in buyer credits plus more than $120 million paid to Tesla corporate in undeserved zero-emission credits from other car manufacturers) remains a lifestyle choice personal statement for the rich with performance inferior to a mass-produced gasoline-powered muscle car.

SunPower, Solar City, and First Solar are ever-more complex scams. They have figured out how to make consumers complicit in raiding the federal and state treasuries, and utility ratepayer wallets. The latest evolution of their grift is to hide the true net energy and monetary losses of commercial and residential solar with a leasing model that benefits from huge subsidies including the current federal 30% tax credit for construction costs and the generous state renewable energy credits for ongoing power production offered in CA and elsewhere. In other countries like Japan, they rely on feed-in tariffs (FIT) for their consumer incentive.

These companies have “inordinately complex (and opaque) accounting practices” according to financial analysts, largely because of the “creative financing” options they offer for their products. This is why many are wary of their claimed financial performance, which is still generally operating at a loss, even as they grow in sales and revenue. When these subsidies dry up, investors’ interest and their sustaining cash will vanish and these business models will collapse. I predict SunPower will not live as a company long enough to fulfill the terms of all the 20-yr leases it is making.

The above statement from SunPower’s most recent financial report works out to the average customer being obligated for $80,000 in payments over 20 yrs for solar electricity initially delivered at 11,500 kWh/yr (1.3kW average rate) if they live in a fairly sunny part of the country, and declining at about 2% per year as the solar panels age. Initially the consumer’s power cost is about $0.035/kWh if they have net metering, and all the real costs are offloaded to the taxpayers and utilities (all rate payers). The positive-sounding lingo for using residential rooftops to bilk the government is “distributed generation.”

SunPower is generally considered the best in the PV solar business and Solar City the worst (largely financed by Leon Musk of Tesla fame), with First Solar in the middle. SunPower offers 25-yr guarantees on their panels, which are genuinely high quality according to what I have read, although manufactured in the Philippines and China. However, here is a sample of their mixed consumer ratings:
http://www.roofery.com/solar-panels/reviews/sunpower/